Upper-End U.S. Retailers Have The Upper Hand In October
By Karen Talley, Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- U.S. consumers took a more gilded path in October, with
upper-end retailers finally ridding themselves of some tarnish by posting
better-than-expected same-store sales while their lower-end counterparts
languished a bit.
The reversal came as higher-priced retailers had seen the sharpest sales
declines during the recession, making it easier for them to meet muted
expectations for this October after steep drops in same-store sales a year ago.
Still, the better-than-projected performances by the likes of Saks Inc. (SKS)
and Nordstrom Inc. (JWN) in the department-store group and Urban Outfitters
Inc. (URBN) and Gap Inc.'s (GPS) Banana Republic stores on the apparel side did
come during a month in which the Dow Jones Industrial Average topped 10000 for
the first time in a year, keeping with correlations of high stock prices serving
as comfort to higher-end consumers.
The October results could position higher-end stores better than investors
expected as the holiday season approaches. And while many lower-end retailers
missed expectations, their results weren't dismal and some of the shortfall
could have resulted from analysts increasing estimates after the lower-end group
had carried same-store sales beats in both September and August.
Same-store sales ahead of Thursday's reports were expected to rise 2% from a
year ago. They fell short, according to Thomson Reuters, coming in at 1.8%.
Retail Metrics, which also tracks Wall Street analyst estimates for 30
retailers, said sales beat expectations by showing growth of 2.2%. The
discrepancy could result from the weighting the firms give to companies they
track and which analysts' estimates are included in their tallies.
Regardless, October was the second consecutive month of same-store sales
growth after 12 months of declines and some Christmas spirit was in the air
Thursday.
"This is the first month we can get our insights into the holiday headlines,"
said Janet Hoffman, global managing director of retail for Accenture PLC (ACN),
a software and consulting firm. "More customers are shopping and, with price
still so low, this is an indicator of real growth."
The weekend of Black Friday, the day after the U.S. Thanksgiving holiday and
the busiest shopping time of the year, will be the next test for retailers as
they head toward the holidays. Ken Perkins, president of Retail Metrics, sees
sustenance.
"I think we're looking at a pretty strong" Thanksgiving weekend and holiday
season, Perkins said. "Retailers will be going all out and consumers may even
feel a bit of heat because inventories are so low."
Indeed, in a sign that retailers are running very lean operations, several
raised their guidance for the third quarter, which closed at the end of October
for them. The group includes retailers that beat and others that missed
expectations, as general margin improvement prevails. J.C. Penney Co. (JCP),
Kohl's Corp. (KSS), Aeropostale Inc. (ARO) and Ross Stores Inc. (ROST) were
among those raising third-quarter earnings projections in tandem with reporting
their same-store-sales on Thursday.
-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com
(END) Dow Jones Newswires
11-05-091220ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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